I received an email solicitation for an area of the country...the developer was touting what great "investment" his properties historically made in the region....Ok, this is not unusual and certain areas of any country have regions that beat "the market".
However, this one struck me as odd...when you do the math!!
The developer was touting that from 2005 to 2025, the region doubled in value. DOUBLE in 20 years? That is around 3.6 - 3.7% annual returns....nothing to brag about. Sure there was a meltdown in 2007-2010, but I wouldn't tout that return.
When it came to cap rates., they remained roughly the same over the 20 years. Again. nothing to brag about.
I wonder how many people fell for this. Probably a decent number or they would not keep running the same ads.
The moral of the story is that sometimes, the situation is not what it appears to be!!!
Happy New Years!!
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